Low Conviction

An important element of successful trading is understanding when to bet big and when to bet small aka position sizing.

In no small measure, you could call this trade conviction.

If you study a large number of your winning trades and a large number of your losing trades I would venture that you would find that a large representation of your best trades came from certain days during certain market conditions and vice versa.

Trading is more than about simply following your discipline and taking all your “setups”. Knowing when to be aggressive is just as important.

Your method must provide some way of ascertaining range days and you must have some process that dictates the rules in which you treat these types of days, ie. fade, take smaller profits, trade smaller, or trade something uncorrelated.

Case in point, today is the type of day you could lose a lot of money if you were an over-aggressive intraday trader.

DIA spent 8 hours consolidating, creating an inside day.

DIA 4HDIA 5min

This is what chop looks like.The worst thing you can do here is to be over-aggressive.

Days like these can be frustrating and test your patience, after all, who doesn’t want immediate gratification.

If you find yourself losing patience ask yourself, “Can I take the longer view and recognize that this is just one session and that perhaps today’s action is setting up something better?“.

Watch which way the DIA breaks the 4H outside inside bar pattern tomorrow. That will be the bias.

ABOUT ME

My name is Houston Truong. I'm full-time independent North American equities, options, and cryptocurrency trader and have been trading for the past for 12 years. I coach traders around the world about the intersection between trading, peak performance, and psychology. I am also the founder of the Montreal Traders Meetup group.